Spar Group Ltd., a South African food and liquor retailer, is working with an Angolan partner to open a store in the country’s capital, Luanda, in the next six months, Finance Director Mark Godfrey said.
“Spar will provide products and logistics support,” Godfrey said in an interview last week. “We decided some time ago that in taking our business model to Africa we needed local expertise or we were wasting our time.” Godfrey declined to name the Angolan partner.
As food retail in South Africa is becoming more competitive, grocers are expanding in the rest of Africa. Shoprite Holdings Ltd., South Africa’s largest retailer, opened its first store in Luanda in 2003. It has 153 supermarkets outside South Africa in 16 African countries.
Massmart Holdings Ltd., the South African food and goods wholesaler owned by Wal-Mart Stores Inc., with 44 stores on the continent outside of South Africa, said Aug. 22 that it plans to shift some focus from South Africa to elsewhere on its home continent because consumers are struggling to repay debt as unemployment rises and accelerating inflation curbs profit growth. Carrefour SA, the French-based retailer in partnership with distributor CFAO SA, plans to open shops in eight African countries.
Spar’s shares slid 1.8 percent to 1110 rand as of the close in Johannesburg, extending their decline this year to 17 percent. The FTSE/JSE Africa Food & Drug Retailers Index has fallen 21 percent this year.
“There has been a very clear change in Spar’s thinking about Africa in the past 18 months, looking to grow its presence,” said Kirsty Laschinger, retail analyst at SBG Securities Ltd. in Johannesburg. “Angola is a tough geography with increasing competition, but it’s a big economy and if you are looking to grow in the west coast of Africa you have to be in the big countries.”
With gross domestic product of $114 billion, Angola is sub-Saharan Africa’s third-biggest economy after South Africa and Nigeria. The economy is forecast by the country’s central bank to expand 6.5 percent this year.
South Africa will probably cut its economic growth forecast for this year to as low as 2 percent, Finance Minister Pravin Gordhan said July 19.
While Spar, which is based in Pinetown near the city of Durban, may supply most of the goods sold in the Angolan store, some products will be sourced locally, with the Angolan partner deciding on the speed that further stores will be opened, Godfrey said. Spar already has stores in Swaziland, Namibia, Mozambique and Botswana. It owns 35 percent of Spar Zimbabwe, which is expanding into Zambia.